Brothers, sisters, elders, and pastors should think twice before getting insurance from Church Mutual Insurance Company. Church Mutual’s claims handlers will read the insurance policy to find a smart way to avoid paying the church in the event of an accident. Evidence of this can be found in the recent Hurricane Michael case where Church Mutual successfully argued that it was not obligated to pay any premiums unless the church holding the policy made a decision to be paid at actual cost.
Warning! If you’re a litigation professional, you’re already wondering how Church Mutual abandoned this legal process and you can’t believe it. Even the judge found that there was no evidence to support the argument. Maybe that should have been a sign (not from God, but others are working on this) that after hundreds of millions of claims, the argument should fail. Perhaps because no insurance company would act in such “bad faith” and make this argument, the results turned out the way they did.
Our law firm is committed to being the best we can be, and that means learning insurance cases every day. We spend thousands of dollars on research and electronic reports. In addition, we have a lawyer in our firm who is a full-time legal expert who helps our lawyers win cases based on all types of investigations. Some may think I’m this friendly guy who talks or goes sailing in my free time, but hours of every day are spent learning about insurance laws. Doing this at a high level isn’t cheap, but if you want to win and beat the insurance companies that keep paying, you do what it takes.
So, during those hours of study, I recently came across a letter covering a recent case against a church in favor of Church Mutual Insurance Company regarding Hurricane Michael. I am one of several valuable cases that survived Hurricane Michael, and our firm represents several churches in the United States. This random post from a newsletter that is supposed to help me find the right cases caught my attention. Church Mutual filed a lawsuit against its charter church, which was affected by Hurricane Michael. I was intrigued.
The forensic pathologist shows that there is a the sealed verdict of the jury. I have never seen a docket with a sealed judgment in federal court. I have been doing this work for 40 years. I was very impressed. The unpublished decision that is available for us to view (but only if you are subscribed to another digital service) contained the following:
I have been doing this all my adult life. I have never seen a sentencing question put to a jury like this. It is unknown. So, I dug deep.
The summary judgment order issued by the judge explained the Church Mutual Insurance Company’s claims:
St. Michael’s Anglican Catholic Church has property insured by the Church Mutual Insurance Company (“CMIC”). After Hurricane Michael damaged the property, CMIC awarded four funds – approximately $100,000 – based on its determination of the actual cash value (“ACV”) of the loss, St.
CMIC says it is no longer in debt because St. Michael never officially opted for ACV recovery. The insurance contract provided “replacement funds”, but only if St. CMIC “does not pay on a Replacement Cost basis” until and unless the insured “makes actual repairs[s] or change[s] . . . as soon as possible”). The policy also provides that St. Michael’s can receive real money, even if it has not repaired or changed. This principle is at the center of the dispute between the groups.
CMIC’s move raises two critical questions: if St. Michael needs to decide on the spread of ACV and if St. Michael’s, in fact, did that.
The court turned to the policy language:
The Valuation section also provides this
[i]f The Exchange Rate is displayed on the Declarations page. . . we will see the value of the Covered Property. . . as follows:
(1) At the Replacement Cost (without deduction for depreciation) as of the time of loss or damage. . . .
(2) You can say . . . on [ACV] rather than based on the Change Value. If you choose to lose or damage the installation on [ACV] background:
(a) Next we will look at the value of the Covered Property at [ACV] foundation . . . ;
(b) You may still claim on a Replacement Cost basis if you notify us of your intention to do so within 180 days after the date of loss or damage.
The judge noted Church Mutual’s arguments:
Based on this language, CMIC says that the claims under the policy are replacement value (‘RCV’) ‘involuntary,’ so the insured must take action to pay the ACV method… and making a decision to continue with RCV benefits. Otherwise, the word ‘election’ in this policy is inappropriate.’).
Analyzing this fact, the judge wrote:
This doesn’t make sense to me, for several reasons. First, CMIC was unable to explain what ACV selection looks like. See Hearing at 56:8-57:19. And CMIC says there is no law to support its construction. Further, the Valuation components are not clearly prioritized: the RCV component is not prioritized, and the ACV component is not prioritized. Finally, as St. As Michael points out, the Duty on Loss section does not say anything about the insurer’s need to produce an ACV as opposed to an RCV.
On the other hand, ‘replacement’ indicates the substitution of something new (ACV valuation) for something that is already there (RCV valuation). And precedent suggests that the Eleventh Circuit may agree that this principle requires ACV’s affirmative action. See Buckley Towers Condo., Inc. v. QBE Ins., 395 F. App’x 659, 664 (11th Cir. 2010) (‘[T]the insurance contract provides [a] ways to get money . . . without any reason to repair or alter anything else—required by the insurer to honor ACV’s claims.’)
I could write a legal analysis essay on why the judge should not have allowed this side of the argument to go to the jury. Members of my company are in disbelief, saying things like, “no one can change a statement like this.” This is true. Insurance companies train insurance adjusters to pay the actual premiums until replacement costs occur or whatever the policy requires you to add additional premiums to.
So, until this issue is resolved, my suggestion is to ask in writing to pay the exact amount of the cost until the replacement and pay the replacement cost.
There is another study, and it concerns the Church Mutual Insurance Company. Maybe their leaders don’t know about it, but maybe they do. If Church Mutual is an honest and transparent insurance company targeting policyholders who are church leaders, Church Mutual should publish this story as a warning of what the church can expect if the church takes out property insurance. Otherwise, it must move publicly to resign its position.
Here is what Church Mutual says about its values:
“We know our customers are a company.”
“We are motivated by purpose.”
“We do it with respect.”
“We are brave and courageous.”
“We share your commitment to serving and empowering others and working with you not only to protect your people and property, but most importantly, your faith-based mission.”
Most preachers give a good talk. However, we all know that actions speak louder than words. Let’s see what Church Mutual is doing in this time.
Thought of the Day
Give me a hundred preachers who fear nothing but sin and desire nothing but God, and I don’t care if they are religious leaders or lay people, they alone will shake the gates of Hell and establish the kingdom of heaven on earth.